On the eve of Donald Trump’s swearing-in as the 47th President of the United States, the Joe Biden administration has issued final rules regarding the technology-neutral tax credits in the Inflation Reduction Act (IRA), specifically addressing Section 45Y for the Production Tax Credit (PTC) for clean electricity production and Section 48E for the Investment Tax Credit (ITC) for clean electricity investment.
Eligible zero-carbon power technologies include wind, solar, hydroelectric, marine and hydrokinetic energy, geothermal, nuclear energy, and certain waste heat recovery facilities. The final rules clarify how to determine the greenhouse gas emission rate during power generation. In the future, if adjustments to the list of zero-carbon technologies are needed or new lifecycle analysis models are developed to assess emission rates, the U.S. Department of Energy’s national laboratories will conduct the analysis with the assistance of various advisory bodies and other experts.
The Treasury Department stated that projects commenced before 2025 can continue to enjoy the traditional PTC and ITC, while projects commissioned after December 31, 2024, will be eligible for the new clean electricity tax credits, replacing the previous policies. According to the IRA and the Bipartisan Infrastructure Law, such tax credits are expected to help American households save up to $38 billion on electricity bills by 2030.
U.S. Energy Secretary Jennifer M. Granholm said, “America’s clean energy boom is no accident; it is the result of President Biden’s industrial strategy, leveraging a suite of incentives to accelerate carbon-cutting technologies and bolster national energy resilience. The final rules issued today provide the clarity clean energy producers need to deploy more clean energy solutions.”
The rule has received widespread support from the renewable energy industry. Mike Carr, executive director of the Solar Energy Manufacturers Association (SEMA), said the rule brings investment certainty to the solar industry. He emphasized that the new regulations will tighten requirements to better support American photovoltaic manufacturers and key component producers, with project developers needing to use U.S.-made components to qualify for domestic production incentives.
Ray Long, president and CEO of the American Council on Renewable Energy (ACORE), called it a transformative policy. Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), said the tax credits are crucial for driving American-made photovoltaic projects, particularly in incentivizing the use of U.S.-made components for photovoltaic and energy storage projects. She pointed out that repealing these rules would make it easier for China to win in the global photovoltaic market competition and weaken U.S. job and economic growth opportunities.
In addition, the U.S. Treasury has issued final rules under Section 45X of the Internal Revenue Code regarding the Production Tax Credit for advanced manufacturing, providing incentives for domestic production across the entire photovoltaic industry chain.
